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Health Plan Coalition Unveils Details of New ‘Pay for Performance’ Program for Physicians

The Integrated Healthcare Association, a California health policy group, yesterday at a press conference unveiled a new physician group performance program that may help improve the quality of health care for about eight million state HMO members. Under the Pay for Performance program, six of the largest health plans in California -- Aetna Inc., BlueCross of California, Blue Shield of California, Cigna, Health Net Inc. and PacifiCare Health Systems Inc. -- will use a "common scorecard" to measure the performance of the physician groups in their HMO networks. The health plans will consider preventive and chronic care management, as well as patient satisfaction, and will offer doctors incentives based on their performance and "year-to-year improvements." The health plans, which plan to implement the program by 2003, will each determine the amount of the incentives that physician groups in their networks will receive. An independent group will "validate" the performance of the physician groups and publish the results, and a steering committee of business, health plan, physician group and consumer representatives under IHA will manage the program. In addition, a technical committee that includes experts from the National Committee on Quality Assurance, the University of California-Berkeley Center for Health Research and the UC-San Francisco Institute for Health Policy Studies will study and improve the performance measures used in the program.

Reaction

Steve McDermott, president and CEO of Hill Physicians Medical Group and chair of the IHA board of directors, said at the press conference that the Pay for Performance program establishes a "business case for performance and a business case for quality" at the physician group level and a "common set of metrics" that encourages doctors to improve their performance. "We have the opportunity for significant financial rewards if we do a good job. Our patients will be healthier, our physicians will be happier," he said. According to Peter Lee, president and CEO of the Pacific Business Group on Health, an employer coalition, the program represents a "great opportunity" for employers and consumers to "differentiate at the physician group level." He said, "Purchasers are very interested in making standardized, comparative quality data available to consumers and in rewarding better quality. This initiative does both." Beau Carter, executive director of IHA, added, "In an otherwise highly competitive marketplace, where health plans naturally want to differentiate themselves, these plans have seen this as the right thing to do -- measure and reward quality of service and quality of care" (Josh Kotzman, California Healthline, 1/16).

However, Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, called the program a "smoke screen" developed by health plans to "score some public relations points." He added, "Fundamentally, it's a mirage. If they really wanted to change the quality of care patients received, they would pay doctors more for treating the sicker patients" (White, Los Angeles Times, 1/16). Although Peter Warren, a spokesperson for the California Medical Association, said that the group "welcomes any plan" that would improve the quality of care, he added that not "all doctors have completely bought" into the program (Silber, Contra Costa Times, 1/16). In addition, health plans would likely cover the cost of incentives for physician groups -- about $100 million per year -- through increased health insurance premiums for members, which the Los Angeles Times reports "could be controversial." The group plans to assemble a task force to address additional details of the program and hopes to launch the plan "within a year" (Los Angeles Times, 1/16).

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